Correlation Between Wheaton Precious and Perseus Mining

Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and Perseus Mining at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Wheaton Precious and Perseus Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wheaton Precious Metals and Perseus Mining, you can compare the effects of market volatilities on Wheaton Precious and Perseus Mining and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Wheaton Precious with a short position of Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and Perseus Mining.

Diversification Opportunities for Wheaton Precious and Perseus Mining

-0.45

Correlation Coefficient

Wheaton Precious  Perseus Mining

Very good diversification

The 3 months correlation between Wheaton and Perseus is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Perseus Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and Wheaton Precious is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Wheaton Precious Metals are associated (or correlated) with Perseus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perseus Mining has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Perseus Mining go up and down completely randomly.

Pair Corralation between Wheaton Precious and Perseus Mining

Assuming the 90 days trading horizon Wheaton Precious is expected to generate 2.04 times less return on investment than Perseus Mining. But when comparing it to its historical volatility, Wheaton Precious Metals is 1.01 times less risky than Perseus Mining. It trades about 0.06 of its potential returns per unit of risk. Perseus Mining is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  237.00  in Perseus Mining on October 21, 2024 and sell it today you would earn a total of  9.00  from holding Perseus Mining or generate 3.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Wheaton Precious Metals  vs.  Perseus Mining

Wheaton Precious Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wheaton Precious Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Perseus Mining

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Perseus Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wheaton Precious and Perseus Mining

The main advantage of trading using opposite Wheaton Precious and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious position performs unexpectedly, Perseus Mining can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Perseus Mining will offset losses from the drop in Perseus Mining's long position.

The idea behind Wheaton Precious Metals and Perseus Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.